Energy Efficiency Changes Coming

The UK's Energy Efficiency (Private Rented Property) (England and Wales) Regulations 2015 Act 2015 makes important changes to the law applying to privately rented domestic and non-domestic properties.

In particular, these regulations require non- domestic properties to achieve a minimum standard with regards to their energy efficiency. Specifically, this standard concerns the performance of the energy used by buildings for processes such as heating and powering. Non-domestic properties include individual properties such as retail units located in large buildings.

Properties are given a ranking under the Energy Performance Certificate (EPC) in order to determine their standing.

There are two significant Regulations that have been introduced to the non-domestic private sector:

As of 1 April 2018 non-domestic privately rented properties must achieve a minimum EPC rating of band E. If a property receives a lower EPC rating, the landlord is not permitted to grant a tenancy to new or existing tenants.

From 1 April 2023, all non-domestic properties (including non-rented) must have achieved an EPC rating of band E.

Provided there haven't been any significant changes made to the property involving heating and air conditioning, an EPC rating is valid for 10 years once it has been registered.

In order to comply with the new regulations, the landlord must upgrade the property if an energy rating of F or G is attained.

If eligible, a landlord can claim to be exempt from making these upgrades. This claim must be registered under the PRS Exemptions Register.

To qualify for an exemption, the property must be let on a tenancy that is either on a term that is maximum of 6 months, or on a term that is intended to last 99 years or more.

So what happens if you purchase a property which does not meet the minimum standard but is being bought subject to a tenancy? Any purchaser will have a six month window to bring the property up to the minimum standard. This exemption will last for six months from the date at which they became a landlord.

Please note an exemption that has been registered does not transfer to a new owner if a property is sold.

If you have any queries or concerns or require further information, please do not hesitate to contact Dina Parmar Commercial Property Partner at Band Hatton Button who would be delighted to assist.